On April 1, 20-3, Kwik Kopy Printing purchased a copy machine for $50,000. The estimated life of the machine is five years, and it has an estimated salvage value of $5,000. The machine was used until July 1, 20-6.

Required:

1.	Assume that Kwik Kopy uses straight-line depreciation and prepare the following entries:
(a)	Adjusting entries for depreciation on December 31 of 20-3 through 20-5.
(b)	Adjusting entry for depreciation on June 30, 20-6, just prior to trading in the asset.
(c)	On July 1, 20-6, the copy machine was traded in for a new copy machine. The market value of the new machine is $38,000. Kwik Kopy must trade in the old copy machine and pay $22,000 for the new machine.
2.	Assume that Kwik Kopy uses sum-of-the-years-digits depreciation and prepare the following entries:
(a)	Adjusting entries for depreciation on December 31, 20-3 through 20-5.
(b)	Adjusting entry for depreciation on June 30, 20-6, just prior to trading in the asset.
(c)	On July 1, 20-6, the copy machine was traded in for a new copy machine. The market value of the new machine is $38,000. Kwik Kopy must trade in the old copy machine and pay $22,000 for the new machine.

CHART OF ACCOUNTSKwik Kopy PrintingGeneral Ledger

	ASSETS
101	Cash
122	Accounts Receivable
141	Supplies
145	Prepaid Insurance
181	Copy Machines
181.1	Accumulated Depreciation-Copy Machines

	LIABILITIES
202	Accounts Payable
219	Wages Payable

	EQUITY
311	Owners, Capital
312	Owners, Drawing

	REVENUE
401	Sales
416	Gain on Exchange of Copy Machine

	EXPENSES
511	Wages Expense
512	Advertising Expense
521	Rent Expense
523	Supplies Expense
525	Phone Expense
533	Utilities Expense
535	Insurance Expense
541	Depreciation Expense-Copy Machines
549	Miscellaneous Expense
553	Loss on Exchange of Copy Machine

1.

Assume that Kwik Kopy uses straight-line depreciation and prepare the following entries:

(a) Adjusting entries for depreciation on December 31 of 20-3 through 20-5.

Additional InstructionGeneral Journal Instructions

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GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2

	(b) Adjusting entry for depreciation on June 30, 20-6, just prior to trading in the asset.
	(c) On July 1, 20-6, the copy machine was traded in for a new copy machine. The market value of the new machine is $38,000. Kwik Kopy must trade in the old copy machine and pay $22,000 for the new machine.

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GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7

2.

Assume that Kwik Kopy uses sum-of-the-years-digits depreciation and prepare the following entries:

(a) Adjusting entries for depreciation on December 31, 20-3 through 20-5.

Additional Instruction

PAGE 3PAGE 4PAGE 5

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2

	(b) Adjusting entry for depreciation on June 30, 20-6, just prior to trading in the asset.
	(c) On July 1, 20-6, the copy machine was traded in for a new copy machine. The market value of the new machine is $38,000. Kwik Kopy must trade in the old copy machine and pay $22,000 for the new machine.

PAGE 1

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7